November 29, 2011

Host: Ted Simons

Arizona Health Insurance Exchange

Arizona has received a $30 million federal grant to create a health insurance exchange to help individuals and small businesses find affordable health insurance. The Governor’s Director of Health Care Policy, Don Hughes, explains how the money will be used.

Ted Simons: In other news, Arizona received a $30 million federal grant today to establish a program to help individuals obtain health insurance. Arizona has not committed to establish the program, and if it chooses not to, the federal government may step in and open one anyway. Arizona is also among a handful of states challenging the constitutionality of reform law. Here to talk about what the money means to Arizona is Don Hughes, the Governor’s Health care Policy Advisor. Good to have you here, thanks for joining us.

Don Hughes: Thank you, Ted.

Ted Simons: What is that money going to be used for?

Don Hughes: What the money is going to be used for, Ted, we're going to continue planning for implementing a health insurance exchange in Arizona. What a health insurance exchange is very simply, it's Travelocity for health insurance. It's a website and call center and the I.T. infrastructure that goes along with that, that will allow people to find the health insurance that meets both their health needs and is affordable to them and simply make it easier for people to buy commercial insurance for small employers, to offer more affordable choices to employees and allow people to enroll into our public programs like AHCCCHS, food stamps and TANIF.

Ted Simons: Okay. $30 million comes to us for what? Just to get the thing off the ground?

Don Hughes: What the money will be used for, Ted, is to continue some of the additional planning we need to do to implement a health insurance exchange, and to begin the development of the I.T. infrastructure, which is the heart of the exchange. This is not the kind of simple I.T. project where you can call the guys from best buy to come out in an hour on a Saturday and put it together for you. It's an incredibly complex I.T. project that has to communicate with a federal data hub, with AHCCCHS, with DES, the department of insurance, health plans on the exchange. Make determinations on eligibility for AHCCCHS and tax credits on a real-time basis, and make it a consumer experience that is similar to what you would experience on Travelocity or Expedia or amazon.com.

Ted Simons: The impact of exchanges on the uninsured, what do you see for Arizona?

Don Hughes: Based on research we did, during the planning phase that has just ended, we believe we can reduce Arizona's uninsured rate of 19% where it stands today, to 11%, that we could add probably 500,000 people or more to either commercial or public insurance through the AHCCCHS program.

Ted Simons: With that in mind, how much flexibility will the state have in figuring out the best way to go ahead and run, manage, use these exchanges?

Don Hughes: Well, it is a federal law. So there are certain requirements within the law and within the federal regulations that go along with that. But states have an awful lot of flexibility in designing the exchange. For example, you can have what's referred to as an active purchaser model, where the state goes out and contracts with a handful of companies. Or you can take the approach that Arizona favors, of an open market that any health insurer that meets the minimum federal requirements to sell on the exchange, who wants to sell, will be allowed to. Our position is, we want to maximize the amount of choice and competition in the insurance market. We want to give small employers and individuals as many choices as they can possibly have, but give them the decision support tools to narrow those choices down to the three or four or five that really make sense for them.

Ted Simons: Arizona has sent a very strong signal from the governor on down of its dissatisfaction with federal health care reform. And the idea of these exchanges in the first place, having to go through the process, why did we get the money when there is so much negativity coming from Arizona?

Don Hughes: Well, Governor Brewer believes the law is unconstitutional. We joined the multistate litigation that's currently before the U.S. Supreme Court. They have scheduled oral arguments for February and March of 2012. We will expect a decision by June or July of 2012. But we don't know what that 5 decision is going to be. So if -- the Governor believes it is simply prudent and in Arizona's best interests to continue the planning process. So if we have to have an exchange, should that part of the law be upheld, it is better for Arizona to design and operate an exchange we believe is best for Arizona, rather than defer to the federal government.

Ted Simons: Last point, many in her own party say they don't want Arizona to be a part to this at all. They want absolutely nothing to do with this. It seems you don't really have a choice, you do it yourself or someone's going to do it for you.

Don Hughes: Exactly. If the law is upheld as constitutional by the Supreme Court, either the state can do it or the federal government can do it, but there will be one beginning with the open enrollment period of October 1st, 2013. There will be an exchange in Arizona. We believe that it is better to hope for the best and plan for the worst so. That we're prepared to run an Arizona exchange based on free market principles.